Telstra under investigation over internet speed claims

The World Today - Tuesday, 11 September , 2007 12:21:00

Reporter: Emma Alberici

ELEANOR HALL: To add to the spicy mix of today's politics, Telstra's boss, Sol Trujillo, has personally endorsed the Federal Opposition leader, Labor's Kevin Rudd, as the best leader for Australia.

Addressing an investment conference in the United States, Mr Trujillo said political leaders around the world should follow Mr Rudd's lead by making broadband the centrepiece of their economic policy.

But the Telstra chief may have landed himself in hot water, with comments to a US broadcaster in which he claimed that his company's mobile broadband was the fastest in the world.

Emma Alberici has our report.

EMMA ALBERICI: Sol Trujillo does very few media interviews, but at home in the United States he was happy to speak to CNBC Television.

CNBC REPORTER: Australia's Telstra has constructed the fastest mobile broadband network in the world, and if you do the maths it is up to 10 times faster than here in the United States.

CEO of Telstra joining me now, Sol Trujillo.

EMMA ALBERICI: The fastest mobile broadband in the world? Really?

Telecommunications analyst Paul Budde.

PAUL BUDDE: I think that's a very difficult claim to make. There's no doubt that Telstra has a very sophisticated network, it's one of the biggest in the world. The size of the country of course dictates that. But it's a standardised technology, you know, this technology is used throughout the world, it's standardised, and therefore all the countries have, who are building these networks, can generate similar speeds and are generating similar speeds. So it's a bit of a bold claim to say that you are the fastest if it's a standardised technology.

EMMA ALBERICI: But Telstra chief Sol Trujillo wasn't going to let those facts get in the way of the story he had to tell in the United States.

SOL TRUJILLO: Today our network operates at 14.4 megabits per second. This device, which we'll be introducing very soon, operates at 7.2 megabits per second, which will be without, you know, comparables anywhere in the world.

EMMA ALBERICI: According to the experts, Telstra's next generation broadband network uses the same technology being deployed around the world.

PAUL BUDDE: I mean, if you develop an Holden car and you drive it in Australia, or you drive it in America, or you drive it in the UK, you cannot claim that my Holden car in America, you know, if it's the same model, it drives faster than it does in Europe. I mean, it's exactly the same car.

EMMA ALBERICI: The World Today understands that Sol Trujillo's interview with CNBC is today being pored over by the Australian Competition and Consumer Commission, who are examining his claims about Telstra's mobile broadband capacity.

It wouldn't be the first time Telstra management has been whipped by the regulator for making outlandish claims.

(Excerpt from Telstra advertisement)

DUSTIN HOFFMAN: You know, the auction starts soon.

ACTOR: Dustin, relax, okay, we're almost there.

DUSTIN HOFFMAN: I really want that house, but not at any price. Don't forget the limit.

(End excerpt from Telstra advertisement)

EMMA ALBERICI: The company's multi-million dollar advertising campaign featuring Hollywood stars like Dustin Hoffman have been recalled by the Australian Competition and Consumer Commission under the misleading and deceptive conduct provisions.

(Excerpt from Telstra advertisement)

ACTOR: Dustin, this wouldn't happen in Australia.

DUSTIN HOFFMAN: I'm moving there.

VOICEOVER: Get the coverage you need with Telstra Next G Network.

(End excerpt from Telstra advertisement)

EMMA ALBERICI: Earlier this year the ACCC forced Telstra to change the tagline on those ads. The company was claiming that their mobile broadband network experiences no dropouts or interference with the line "that wouldn't happen in Australia". Instead the company was compelled to change that to a less definitive statement of, "I wish I was in Australia".

And Sol Trujillo didn't just raise the ire of the regulator during his trip to the US. Addressing the annual Merrill Lynch Australia investment conference in New York, the Telstra boss put the boot into the Howard Government and provided an endorsement of Labor leader Kevin Rudd.

If a Labor government were to win the election he said policy could not be worse than it is today. He said Kevin Rudd had articulated a quote, "very clear view that says broadband is at the centrepiece of his economic policy. I personally believe any leader in any government around the world has to think that way," he said.

Telco analyst Paul Budde again.

PAUL BUDDE: I think it's totally a political game, because if you really analyse the plans of the Government and the plans of Labor, then under Labor, you know, Telstra will definitely be worse off, because Labor has very clearly indicated they go for structural separation and, you know, inherent to its nature of a Labor Party, it is less tolerant to the sort of attitudes that Telstra has been displaying in the past.

So it is political play from Telstra to support the Labor plans rather than the Government plans. You know, I think it's the war that Sol Trujillo has launched with Helen Coonan, the Minister for Communications, and the regulator that has more to do with that statement rather than, you know, the reality of the policies that are on the table, you know. Under Labor Telstra is worse off.